$600 billion needed to grow food bowl

The ANZ bank says $600 billion of investment is needed to kickstart the growth potential for a food bowl in northern Australia. It's been estimated the investment could see export revenue grow to $1.7 trillion by 2050.

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TONY EASTLEY: As we've been reporting this week, Australia has the potential to be a highly lucrative food-bowl to Asia.

So far the key word has been and is "potential".

AM's business editor Peter Ryan has been looking at the challenges and he joins me now from Sydney.Peter, good morning. Is there general agreement from economists and big business that there's money to be made in ramping up agriculture if the strategy is right?

PETER RYAN: Well Tony there's huge potential and the demand not just now but over the next century is self-evident given the interest for deals from cashed up countries like China where incomes are rising and diets are changing.

The ANZ Bank has estimated that this could mean agricultural exports from Australia could increase by $1.7 trillion between now and 2050. But for this to happen around $600 billion of investment is required now to enable the growth potential to become something tangible that will attract foreign capital.

TONY EASTLEY: So can this be done without foreign capital, do you think?

PETER RYAN: Well the foreign capital is there, it's ready and waiting from China but also India, Malaysia and Indonesia.

But the reality is that foreign capital is liquid and portable. It will only go where it's welcome. So emotional national interest issues seen with the sale of Cubby Station for example and some of the more extreme complaints about selling off the farm are no doubt taken into account by potential foreign investors.

The ANZ's general manager of regional banking Tania Motton says Australia isn't the only investment destination and perceptions count.

TANYA MOTTON: I think that we all have to have a level of maturity in terms of not just what we're trying to achieve but the discussions that are being held locally to how that is actually perceived, whether that's, you know, in the broader market or, you know, offshore.

Australia is still absolutely considered a place to invest and the opportunity is absolutely real but the way in which the dynamic of our local media or, you know, the political debate definitely does have an impact I believe in terms of framing someone's appetite for investing.

Peter Ryan do you think big super funds or even the Australian Future Fund would be looking at investing in Australia's potential to feed Asia?

PETER RYAN: Well those opportunities would certainly be on the radar but this comes down to investment criteria. Super funds would be wanting to see the structures and the strategy so they can crunch the numbers on long term returns to see the value for investors before committing.

And of course you can't have exports without access to markets and a number of trade agreements in Asia need to be re-negotiated or refined to make that happen.

TONY EASTLEY: And of course a big issue here is keeping families on the farm to maintain the investment. How important is that?

PETER RYAN: Well the ANZ estimates that $400 billion is needed to support farm turnover over the next 20 years to encourage generational handover and to keep that capital on and in the land.